Mexico: Economic activity continues to struggle
October 24, 2013
Economic activity expanded 0.8% over the same month last year in August according to the IGAE (Indicador Global de la Actividad Economica). The expansion came in below the revised 1.9% increase observed in July (previously reported: +1.7% year-on-year) and fell short of market expectations of a 1.0% rise.
The slowdown observed in August reflected a deceleration in services. Industry decreased for a fourth consecutive month, while agriculture contracted sharply. A month-on-month comparison confirms the deceleration suggested by the annual data. Economic activity expanded a seasonally-adjusted 0.2% over the previous month, which was down from the 0.6% increase observed in July.
Meanwhile, the trend continues to point downward, with annual average growth in economic activity falling from 1.9% in July to 1.7% in August. This marks the lowest reading in more than three years.
The Central Bank (Banxico) expects the economy to grow between 2.0% and 3.0% this year. For 2014, the Bank left its growth projection unchanged at between 3.2% and 4.2%.
LatinFocus panelists see the economy growing 1.3% this year, which is down 0.8 percentage points from last month's forecast. The panel expects growth to pick up to 3.5% in 2014, which is down 0.2 percentage points from last month's estimate.
Author: Ricardo Aceves, Senior Economist